Financial Fraud: WILLIAM B. HUNGERFORD And TIMOTHY O. MILBRATH Found Guilty Of Conspiracy To Commit Money Laundering, And Six Counts Of Wire Fraud
Ex-White House Military Aide and Maryland Businessman Found Guilty For Operating Fraudulent EB-5 Visa Scheme
NEW ORLEANS – U.S. Attorney Peter G. Strasser announced that a federal jury returned guilty verdicts against two Maryland men for defrauding victims of over $15 million during the defendants’ operation of the New Orleans EB-5 Regional Center after Hurricane Katrina.
After a three-week trial before U.S. District Judge Greg G. Guidry, the defendants, Maryland businessman WILLIAM B. “BART” HUNGERFORD, JR., age 58, and TIMOTHY O. MILBRATH, age 63, a former U.S. Air Force colonel who served as a White House military aide for three presidential administrations, were found guilty of conspiracy to commit wire fraud and mail fraud, conspiracy to commit immigration fraud, conspiracy to commit money laundering, and six counts of wire fraud.
The charges stemmed from their scheme to defraud immigrant investors who entrusted their money to the defendants to invest in job-creating companies in New Orleans after Hurricane Katrina. As was alleged in the indictment, HUNGERFORD and MILBRATH conspired together to defraud immigrants who sought to apply for EB-5 visas. The visa program permits immigrants to invest a minimum of $1,000,000.00 in a United States job-creating enterprise and obtain permanent residency if, after two years, that investment created or preserved ten American jobs. The minimum investment required was lowered to $500,000.00 if the investment was made in a targeted employment area (“TEA”), defined as an area with an unemployment rate of 150% of the national average.
The superseding indictment alleged that HUNGERFORD and MILBRATH formed NobleOutReach, LLC, to operate the EB-5 investment fund, and they contracted with the City of New Orleans to run the New Orleans Regional Center. Because New Orleans was a designated TEA in the years after Hurricane Katrina, immigrant investors only had to invest $500,000.00 in order to qualify under the EB-5 visa program. HUNGERFORD and MILBRATH represented to investors that their $500,000.00 investment would be used to create jobs in New Orleans and contribute to the rebuilding of the City. A total of 31 immigrants invested a total of $15.5 million in the defendants’ investment fund.
Evidence at trial showed that, instead of investing the immigrant investors’ entire $15.5 million into New Orleans-based job-creating enterprises, HUNGERFORD and MILBRATH fraudulently misappropriated investor funds for their own personal gain. HUNGERFORD and MILBRATH wrote themselves checks drawn from investor funds which they disguised as “loans” or “loan repayments.” The evidence showed that the defendants created multiple companies in order to conceal the path of investor funds and misappropriate them. The defendants also spent investor funds to purchase vacation and rental properties for their own benefit. In the course of perpetrating the fraud, the defendants made false representations to investors, U.S. Citizenship and Immigration Services (USCIS), and the City of New Orleans.
As to each of the six counts of wire fraud, along with conspiracy to commit wire and mail fraud, the defendants face a maximum penalty of twenty years in prison, a $250,000.00 fine, and up to three years of supervised release. As to the money laundering conspiracy, the defendants face a maximum of 20 years in prison, a $500,000.00 fine, and up to three years of supervised release. As to the conspiracy to commit immigration fraud, the defendants may receive a maximum of five years in prison, a $250,000.00 fine, and up to three years of supervised release. Sentencing was set for December 17, 2019 before Judge Guidry.
“This was a very complex case with many moving parts,” The U.S. Attorney’s Office noted. “But it in the end, it ultimately all comes down to greed. This scheme to defraud our community, taxpayers and those lawfully seeking permanent residency in the United States, occurred in the wake of one of the most turbulent times in our city’s history. Any attempt by perpetrators to conduct fraudulent schemes must not be tolerated. It is our greatest hope that this verdict serves as notice to everyone that justice will prevail in the end.”
“The protection of our citizens is one of the most sacred responsibilities entrusted to the FBI. The crimes charged, not only involved stealing money from potential US citizens, but also money that was to be utilized to help re-build New Orleans after Hurricane Katrina. The FBI takes a proactive approach to identify perpetrators involved in these crimes and will continue to investigate and prosecute them to the fullest extent of the law. As in this instance, these crimes truly victimized an entire community and are not tolerated by the FBI nor should they be tolerated by any citizens”, said FBI Acting Special Agent in Charge Anthony Riedlinger.
U.S. Attorney Strasser praised the work of the Federal Bureau of Investigation’s New Orleans Field Office. The case was prosecuted by Assistant U.S. Attorneys Matthew R. Payne, Shirin Hakimzadeh, Maria M. Carboni, and Andre J. Lagarde.